How to Incorporate a Private Limited Company in India: Step-by-Step Guide
Introduction
Setting up a Private Limited Company (Pvt. Ltd.) in India is one of the most preferred ways to start a business. It offers limited liability, higher credibility, and better opportunities for raising capital. In this guide, we’ll explain the legal meaning of a private company under the Companies Act, 2013, and provide a step-by-step process to incorporate a Private Limited Company online through the MCA portal.
What is a Private Limited Company?
As per Section 2(68) of the Companies Act, 2013, a private company is an entity with a minimum prescribed paid-up share capital and Articles of Association (AoA) that:
- Restrict the transfer of shares.
- Limit the number of members to 200 (excluding current/former employees who became members during employment).
- Prohibit public invitations for subscribing to its securities.
According to Section 3 of the Companies Act, 2013, a private company may be incorporated for any lawful purpose by two or more persons.
Step-by-Step Process for Incorporation of a Private Limited Company
The Ministry of Corporate Affairs (MCA) has simplified the process using the SPICe+ form (Simplified Proforma for Incorporating Company Electronically Plus). The entire process can be completed online.
Step 1: Obtain DSC and DIN
- A Digital Signature Certificate (DSC) is mandatory for all directors to file forms online.
- A Director Identification Number (DIN) is required for each director.
Step 2: Reserve Company Name (SPICe+ Part A)
- Login to MCA portal > Company Services > SPICe+ Part A.
- Select the NIC Code relevant to your company’s business activity.
- The proposed company name can have up to 75 characters.
- Abbreviations like “Pvt. Ltd.” cannot be used during name approval.
- MCA generally takes 20 days for approval, and resubmissions get 15 days (T+15).
- Fee for name reservation: ₹1,000.
Step 3: File SPICe+ Part B with Required Documents
Documents needed include:
- MoA and AoA (mentioning entrenched provisions, if any).
- Form INC-9 (Declaration by first directors and subscribers).
- Proof of registered office (rent agreement/ownership proof).
- Utility bill (not older than 2 months).
- NoC from property owner.
- Identity and address proof of directors and subscribers.
- Declaration of director’s interest in other entities.
- INC-3 consent form (for One Person Company nominee).
- Foreign corporate incorporation certificate (if applicable).
- Forms INC-14 & INC-15 (for Section 8 companies).
- Name reservation approval copy.
Filing Fees:
- Based on Share Capital:
- Up to ₹15,00,000 – No fee.
- Above ₹15,00,000 – ₹500.
- Based on Number of Members:
- Up to 20 members – No fee.
- Above 20 members – ₹500.
(Stamp duty is additional and varies across states.)
Step 4: Linked Forms and Digital Filing
Once Part B is submitted, linked forms are enabled:
- eMoA – Electronic Memorandum of Association
- eAoA – Electronic Articles of Association
- INC-9 – Declaration of subscribers
- URC-1 – If applicable
- AGILE Pro-S – For GSTIN, EPFO, ESIC, and opening a bank account
Step 5 Final Process
- Affix DSCs of all directors.
- Upload documents on MCA portal.
- Pay applicable fees.
- Generate acknowledgment email.
- Receive Certificate of Incorporation (CoI) along with PAN & TAN.
Benefits of Incorporating a Private Limited Company
- Limited liability protection for shareholders.
- Separate legal entity status.
- Higher credibility with banks, investors, and stakeholders.
- Easy fundraising through equity and venture capital.
- Perpetual succession regardless of ownership changes.
FAQs on Incorporation of a Private Limited Company
- What is the minimum number of directors required to form a Pvt Ltd company?
Ans. At least two directors and two shareholders are required.
- Can NRIs or foreign nationals incorporate a Private Limited Company in India?
Ans. Yes, foreign nationals and NRIs can become directors/shareholders, subject to at least one resident director.
- How long does it take to register a Pvt Ltd company in India?
Ans. Generally, it takes 7–15 working days, depending on MCA approvals.
- Is PAN and TAN allotted automatically during incorporation?
Ans. Yes, MCA issues PAN and TAN along with the Certificate of Incorporation.
- What is the government fee for incorporation?
Ans. It depends on share capital and number of members. For companies up to ₹15,00,000 share capital, no government fee is charged (excluding stamp duty).
Conclusion
Incorporating a Private Limited Company in India is now faster and easier with MCA’s SPICe+ form. With proper documentation and digital filing, you can get your Certificate of Incorporation, PAN, and TAN in a single process. This business structure offers multiple advantages, including limited liability, credibility, and better fundraising options – making it the most popular choice for entrepreneurs and startups in India.
